Water investors threaten to quit agreement<\/p>\n
Bambang Nurbianto, The Jakarta Post, Jakarta<\/p>\n
The two private European tap water companies in Jakarta have
\nthreatened to pull out of their agreement with the City
\nAdministration and the city water company of Pam Jaya if their
\nprice increase proposal is rejected by the City Council.<\/p>\n
Two executives from PT Thames Pam Jaya (TPJ) and PT PAM
\nLyonnaise Jaya (Palyja) said that without the price increase, the
\ninvestors could no longer bear the financial losses suffered
\nsince 1999.<\/p>\n
\"If there is no signal from Indonesia, by increasing the price
\nby 45 percent or whatever, it is better if we pull out (from the
\nagreement),\" Vice President for Business Development of ONDEO
\nServices, Bernard Lafrogne, told The Jakarta Post on Monday.<\/p>\n
PT TPJ, which is a subsidiary of Britain's Thames Water
\nInternational, supplies customers in eastern Jakarta while PT
\nPalyja, a subsidiary of France's ONDEO (formerly Lyonaisse des
\nEaux), serves customers in the west of the city.<\/p>\n
PT TPJ's Communication & External Relations Director Rhamses
\nSimanjuntak did not explicitly say that it would also do the
\nsame, but did say that any company operating water supply would
\ncollapse if there was no price adjustment.<\/p>\n
\"Charges to the customers are the only income for water supply
\noperators, without any adjustment, even only to cover inflation,
\nit will collapse,\" Rhamses told the Post.<\/p>\n
City Governor Sutiyoso has agreed with the price increase
\nproposed by the companies and he has proposed a 45 percent price
\nincrease to the City Council last week and the council planned to
\ndiscuss the proposal on Thursday.<\/p>\n
The price increase received strong opposition from non-
\ngovernmental organizations and water consumer associations,
\nsaying that the increases were not acceptable as the companies
\n\"had done nothing to improve the quantity or quality of their
\nservice.\"<\/p>\n
The strongest opposition came from the Jakarta Drinking Water
\nConsumers Community (Komparta), stressing it would file a class
\naction lawsuit against the city administration and city council
\nif the water charges were increased.<\/p>\n
On Monday Chairman of the Jakarta Chapter of the Indonesian
\nWater Contractors Association (Akaindo) Poltak Situmorang
\ncriticized the threat from the foreign investors, saying that it
\nindicated they were not professional.<\/p>\n
According to Poltak, a water price increase is not necessary
\nif the operators could reduce the water leakage and the number of
\nthieves as well as its high administrative cost, which burdened
\nwater consumers.<\/p>\n
Poltak referred to the high salary of the companies'
\nexpatriates claiming that each official received Rp 125 million
\nper month (nearly US$ 14,000 per month) and that the offices of
\nthe two companies were in very expensive buildings: Wisma Danamon
\non Jl. Sudirman and Central Senayan Tower on Jl. Asia Afrika.<\/p>\n
The cooperation was based on a contract, which was initially
\nsigned in early 1998 before the fall of president Soeharto. The
\nagreement was revised in 2001 to adjust to the economic
\natmosphere, which drastically changed after the radical changes
\nwith the economy.<\/p>\n
Although the foreign investors and Pam Jaya stated in the
\ncontract -- which has a 25-year term -- that all aspects would be
\nconducted transparently, Lafrogne was reluctant to publicly
\ndisclose the documents of the revised agreement, saying it should
\nbe agreed by Pam Jaya.<\/p>\n
\"... If the document gets into the hands of the people who are
\nunprofessional, it would only be used for polemics to say bad
\nthings about cooperation (between Pam Jaya) and the private
\nsector,\" Lafrogne added.<\/p>\n
Poltak also questioned the reluctance of the investors to
\npublish the cooperation agreement, saying that it could spark
\nsuspicion amid the public. \"If the agreement is fair why are they
\nhiding it.\"<\/p>\n
Under the contract agreement, signed in 1998, the investors
\nwould invest Rp 3 trillion during the first five years of the 25-
\nyear profit-sharing schemes. After the five years, they would
\nalso reduce water leakage to 35 percent.<\/p>\n
However, from the data, jointly issued by TPJ and Palyja,
\nshowed that TPJ could only manage to bring water loss from 57.6
\npercent in 1998 to 43.5 percent in December 2002 and Palyja from
\n61 percent to 43.3 percent. In addition, the total joint
\ninvestment of the companies through December 2002 reached only Rp
\n1.06 trillion.<\/p>",
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